Correlation Between Offshore Oil and China Merchants
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By analyzing existing cross correlation between Offshore Oil Engineering and China Merchants Shekou, you can compare the effects of market volatilities on Offshore Oil and China Merchants and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Offshore Oil with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offshore Oil and China Merchants.
Diversification Opportunities for Offshore Oil and China Merchants
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Offshore and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Offshore Oil Engineering and China Merchants Shekou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Shekou and Offshore Oil is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Offshore Oil Engineering are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Shekou has no effect on the direction of Offshore Oil i.e., Offshore Oil and China Merchants go up and down completely randomly.
Pair Corralation between Offshore Oil and China Merchants
Assuming the 90 days trading horizon Offshore Oil Engineering is expected to generate 0.58 times more return on investment than China Merchants. However, Offshore Oil Engineering is 1.72 times less risky than China Merchants. It trades about 0.02 of its potential returns per unit of risk. China Merchants Shekou is currently generating about -0.08 per unit of risk. If you would invest 554.00 in Offshore Oil Engineering on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Offshore Oil Engineering or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Offshore Oil Engineering vs. China Merchants Shekou
Performance |
| Timeline |
| Offshore Oil Engineering |
| China Merchants Shekou |
Offshore Oil and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Offshore Oil and China Merchants
The main advantage of trading using opposite Offshore Oil and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Offshore Oil position performs unexpectedly, China Merchants can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Merchants will offset losses from the drop in China Merchants' long position.| Offshore Oil vs. Zhejiang Kingland Pipeline | Offshore Oil vs. NAURA Technology Group | Offshore Oil vs. HOB Biotech Group | Offshore Oil vs. Ming Yang Smart |
| China Merchants vs. Shandong Publishing Media | China Merchants vs. Offshore Oil Engineering | China Merchants vs. Xinjiang Beixin RoadBridge | China Merchants vs. Beijing Kaiwen Education |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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